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2023 DIGILAW 1664 (PNJ)

Maharia Automobiles v. Anil Kumar

2023-05-08

DEEPAK GUPTA

body2023
JUDGMENT Deepak Gupta, J. This application for grant of leave to appeal under Section 378(4) Cr.P.C is directed against the judgment dated 27.11.2014 passed by learned Judicial Magistrate Ist Class, Hisar, whereby complaint No.220- 2/2010 filed by the complainant - M/s Maharia Automobiles (Applicant) seeking prosecution of accused Anil Kumar (now respondent) under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as 'the N.I. Act'), has been dismissed. 2. Leave granted. On direction to the Registry, number CRA-AS- 249-2023 has been assigned. 3. Copy of the trial Court record has been received and perused. It was alleged by the complainant-firm that accused had purchased a Swaraj Tractor from it for consideration of Rs.2,70,000/- on 17.11.2004, to be repaid on instalments basis along with interest @ 1.5% per month in half yearly instalments on or before 17.02.2007. In the meantime, accused was arrested in a criminal case registered against him under Section 302 IPC and was sent to Central Jail, Bhiwani. He assured the complainant firm to repay the loan along with interest on his release from the jail. In February, 2010, accused came out of Central Jail, Bhiwani. Complainant approached him for repayment of the loan and the accused issued cheque No.305103 dated 29.09.2010 for a sum of Rs.3,50,000/- drawn on Allahabad Bank, Hansi Branch, District Hisar in favour of the complainant. On presentation, the cheque was dishonored vide bank memo dated 01.10.2010 with remarks "insufficient funds". Legal notice dated 16.10.2010 was sent to the accused to make payment of the cheque amount within 15 days as stipulated in the notice but accused failed to do so and hence the complaint was filed on 4.11.2010. 4. After recording preliminary evidence, accused was summoned to face trial under section 138 of the Negotiable Instruments Act. On his appearance, he was served with notice of accusation, to which he pleaded not guilty and claimed trial. Evidence produced by the complainant was taken on record. Statement of the accused under Section 313 Cr.P.C was recorded and after hearing both the sides, learned Magistrate dismissed the complaint by observing that loan in question had been taken on 17.11.2004 and the debt was to be paid before 17.02.2007, whereas the cheque in question had been issued on 29.09.2010 i.e., after expiry of 6 years from the date of loan and thus, loan taken by the accused had become barred by time after 17.02.2007. It was also noticed that complainant had not placed on record any acknowledgement of debt given by the accused within a period of limitation and since at the time of issuance of the cheque in question, the debt was not legally enforceable, so the cheque was for a time barred debt and so conviction under section 138 of the Negotiable Instruments Act could not be recorded. To take this view, learned trial Court relied upon Jagadamba Parisar Sahakari Pat Sanstha Maryadit v. Shravan Ajinath Ukirde (Bombay) (Aurangabad Bench) 2007(1) BCR 185 and Wilson Carvolho v. Krishna Budhaji Patil (Karnataka) 2014(7) RCR (Criminal) 1586. 5. Assailing the above-said judgment acquitting the accused on the ground of cheque being for a time barred debt, it is submitted by the appellant that trial Court failed to consider the fact that respondent-accused was in judicial custody since 2005 till 2010 and it is only after coming out of the jail that he had issued the cheque. 6. Apart from above, learned counsel for the appellant contended that right of the lender to receive payment and obligation of the borrower to repay never dies with the lapse of time, though it is the remedy which dies. Learned counsel referred to section 25 of the Indian Contract Act to contend that though an agreement made without consideration is void but a promise made in writing to pay wholly or partly a time barred debt, cannot be considered without consideration and thus, is legally enforceable. Learned counsel further contends that the moment cheque is issued, the accused acknowledged his liability to pay time-barred debt and so, it is legally enforceable liability within the meaning of section 25(3) of the Contract Act. 7. Nobody has put in appearance on behalf of the respondent-accused since 06.02.2023, although appearance on his behalf was lastly made on 19.07.2022. Thus, the respondent has chosen not to contest the appeal. 8. I have considered the submissions made by learned counsel for the appellant and have perused the record. 9. To attract section 138 of the N.I. Act, 1881, it is one of the important conditions that cheque in question should have been issued for a legally enforceable debt or liability. Thus, the respondent has chosen not to contest the appeal. 8. I have considered the submissions made by learned counsel for the appellant and have perused the record. 9. To attract section 138 of the N.I. Act, 1881, it is one of the important conditions that cheque in question should have been issued for a legally enforceable debt or liability. Therefore, the issue to be considered by the Court is as to whether a cheque issued for a time barred debt creates any legally enforceable debt or liability as contemplated under section 138 of the Negotiable Instruments Act. 10. Hon'ble Supreme Court in Yogesh Jain v. Sumesh Chadha - Crl. Appeal No.1760-1761 of 2022 arising out of SLP (Crl.) No(s).1805- 1806 of 2020 (decided on October 10, 2022), has held that once a cheque is issued and upon getting dishonored, a statutory notice is issued, it is for the accused to dislodge the legal presumption available under sections 118 and 139 of the Negotiable Instruments Act and that whether the cheque in question had been issued for a time barred debt or not, itself is a matter of evidence. In another case titled Shapoor Freedom Mazda v. Durga Prosad Chamaria, AIR 1961 SC 1236 , while discussing acknowledgement of debt in terms of Section 19 of the Limitation Act, it has been held that an admission as regards liability may be in any form and that it may be expressed or implied and that acknowledgment requires to be construed liberally. 11. To consider the question as to whether a cheque issued for a time barred debt, can attract liability under section 138 of NI Act or not, section 25 of the Indian Contract Act is quite relevant, which reads as under: - "25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law. -An agreement made without consideration is void, unless (1) & (2) xxxxxxx (not relevant to this case); (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract. Explanation 1. xxxxxxx (not relevant to this case) Explanation 2. -) xxxxxxx (not relevant to this case) Illustrations (a) to (d) xxxxxxx (not relevant to this case) (e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract." 12. It is clear from afore-said provision that a promise as made under section 25(3) of the Contract Act to pay the debt, even though barred by limitation, would revive the limitation. 13. A Division Bench of Hon'ble Bombay High Court in Dinesh B. Chokshi v. Rahul Vasudeo Bhatt & Another, Criminal Application No.2933 Of 2007 (decided on 19.10.2012), considered the following questions: - (i) Does the issuance of a cheque in repayment of a time barred debt amounts to a written promise to pay the said debt within the meaning of Section 25(3) of the India Contract Act, 1872? (ii) If it amounts to such a promise, does such a promise, by itself, create any legally enforceable debt or other liability as contemplated by section 138 of the Negotiable Instruments Act, 1881? 14. Answering the first question, it was held in para-No.15 as under: - ""15. On plain reading of Section 13 of the said Act of 1881, a negotiable instrument does contain a promise to pay the amount mentioned therein. The promise is given by the drawer. Under Section 6 of the said Act of 1881, a cheque is a bill of exchange drawn on a specified banker. The drawer of a cheque promises to the person in whose name the cheque is drawn or to whom the cheque is endorsed, that the cheque on its presentation, would yield the amount specified therein. Hence, it will have to be held that a cheque is a promise within the meaning of Sub-section (3) of Section 25 of the Contract Act. What follows is that when a cheque is drawn to pay wholly or in part, a debt which is not enforceable only by reason of bar of limitation, the cheque amounts to a promise governed by the Sub-section (3) of Section 25 of the Contract Act. Such promise which is an agreement becomes exception to the general rule that an agreement without consideration is void. Such promise which is an agreement becomes exception to the general rule that an agreement without consideration is void. Though on the date of making such promise by issuing a cheque, the debt which is promised to be paid may be already time barred, in view of Sub-section(3) of Section 25 of the Contract Act, the promise/agreement is valid and, therefore, the same is enforceable. The promise to pay time barred debt becomes a valid contract as held by the Apex Court in the case of A.V. Moorthy (supra). Therefore, the first question will have to be answered in the affirmative." 15. Division Bench of Hon'ble Bombay High Court held further in respect of second question, in para-No.20 and 21 as under: - "20. While recording our answer to the first Question, we have already held that a cheque issued for discharge of a debt which is barred by law of limitation is itself a promise within the meaning of Sub-section (3) of Section 25 of the Contract Act. A promise is an agreement and such promise which is covered by Section 25(3) of the Contract Act becomes enforceable contract provided that the same is not otherwise void under the Contract Act . 21. Therefore, while answering second Question, we are specifically dealing with a case of promise created by a cheque issued for discharge of a time barred debt or liability. Once it is held that a cheque drawn for discharge of a time barred debt creates a promise which becomes enforceable contract, it cannot be said that the cheque is drawn in discharge of debt or liability which is not legally enforceable. The promise in the form of a cheque drawn in discharge of a time barred debt or liability becomes enforceable by virtue of Sub- section (3) of Section 25 of the Contract Act. Thus, such cheque becomes a cheque drawn in discharge of a legally enforceable debt as contemplated by the explanation to Section 138 of the said Act of 1881. Therefore, even the second question will have to be answered in the affirmative." 16. It is, thus, clear that once a cheque is drawn for discharge of a time barred debt, it creates a promise, which becomes an enforceable contract and, therefore, it cannot be said that the cheque is drawn in discharge of a debt or liability which is not legally enforceable. 17. It is, thus, clear that once a cheque is drawn for discharge of a time barred debt, it creates a promise, which becomes an enforceable contract and, therefore, it cannot be said that the cheque is drawn in discharge of a debt or liability which is not legally enforceable. 17. A similar view has been taken by another Division Bench of Kerala High Court in Dr. K.K. Ramakrishnan v. Dr. K.K. Parthasarthy, 2003(3) RCR (Criminal) 711 (DB). While considering the question as regards enforceability of liability upon dishonour of a cheque, it was held as under: - "9. The primary question that arises for consideration is - Does the delivery of a cheque in favour of a drawee not create a legally enforceable liability? 10 to 14 x x x x 15. For the purpose of the present case, it does not appear to be necessary to go into this matter in detail. It may, however, be mentioned that under Section 25(3) , a promise can be made even in a case where the limitation for recovery of the amount has already expired. Such a promise has to be in writing. It can be in the form of a cheque. When a cheque is delivered to the payee, the person is entitled to present the cheque to the bank and seek payment. In such an event, if the cheque is dishonoured, the liability under Section 138 would arise. It would not be permissible for the accused to contend that the liability was not legally enforceable." 18. This Court (a Co-ordinate Bench), also considered the similar issue in Sumit Singla v. Kala Mandir Sarees and Jewellers - CRM-M- 34617 of 2022 (O&M), decided on 17.08.2022. The Court referred to an earlier case titled Sultan Singh v. Tej Partap, 2022(1) RCR (Criminal) 712, wherein in an identical matter, following questions were formulated for adjudication: - " i) Whether issuance of a cheque for repayment of a time barred debt would amount to a written promise to pay the said debt within the meaning of section 25(3) of the Indian Contract Act, 1872? ii) In case, answer to the first question is in favour of the person in whose favour the cheque has been issued, then would the said promise, by itself, create any "legally enforceable debt", as stated in section 138 of the Negotiable Instruments Act, 1881? ii) In case, answer to the first question is in favour of the person in whose favour the cheque has been issued, then would the said promise, by itself, create any "legally enforceable debt", as stated in section 138 of the Negotiable Instruments Act, 1881? iii) Whether in the facts and circumstances of the present case, the present petition under section 482 CrPC, 1973 would be maintainable? iv) Whether in the present case, the petitioner has been able to prove as to what would be the starting point of the period of limitation, so as to establish that the cheque was issued after the expiry of the period of limitation?" 19. After referring to the relevant case law, it was held as under: - "29. Thus, after considering the relevant provisions as well as the judgments of various Courts on issue no. (i) and (ii), this Court conclusively holds that the issuance of a cheque in repayment of a time barred debt amounts to a written promise to pay the said debt within the meaning of section 25(3) of the Contract Act and the said promise by itself would create a legally enforceable debt or liability, as contemplated by section 138 of the Negotiable Instruments Act. Thus, issue no. (i) and (ii) are hereby answered in favour of the person in whose favour the cheque has been issued. Thus, on the said finding alone, the first argument of the learned counsel for the petitioner stands rejected." Issue No.3 was also answered against the petitioner whereas Issue No.4 was left unanswered being unnecessary. 20. Consequently, in the light of the ratio of the judgments rendered in Dinesh B. Chokshi's case (supra); Dr. K.K. Ramakrishnan's case (supra); Sumit Singla's case (supra); Sultan Singh's case (supra); Yogesh Jain's case (supra) and Shapoor Freedom Mazda 's case (supra), the view taken by the trial Court that conviction under section 138 of the Negotiable Instruments Act cannot be recorded, when a cheque is issued for a time-barred debt, cannot be sustained. K.K. Ramakrishnan's case (supra); Sumit Singla's case (supra); Sultan Singh's case (supra); Yogesh Jain's case (supra) and Shapoor Freedom Mazda 's case (supra), the view taken by the trial Court that conviction under section 138 of the Negotiable Instruments Act cannot be recorded, when a cheque is issued for a time-barred debt, cannot be sustained. Rather, it can be safely held that on 29.09.2010, when the cheque in question was issued by the accused-respondent for paying the amount towards sale consideration of tractor purchased by him on 17.11.2004, the same was issued to discharge the liability of a debt and upon its dishonour, it would make the drawer - respondent liable to be proceeded with under section 138 of the Negotiable Instruments Act. 21. Consequent to the entire discussion as above, the impugned judgment dated 27.11.2014 is hereby set aside. The matter is remanded to the trial Court to decide, based on the evidence already recorded, whether the complainant has proved the ingredients of offence punishable under section 138 of the Negotiable Instruments Act. Since dispute relates to the September, 2010, when the cheque was issued and thus, a period of almost 13 years has already passed, so Registry to return the record to the trial Court within two weeks positively. The matter be placed before the trial Court on 24.05.2023, on which date, the complainant and the accused shall appear either in person or through their duly authorised advocates. After hearing the arguments, the trial Court shall make every possible effort to dispose of the complaint case as early as possible. 22. A copy of this order be sent by the Registry to the respondent-accused as well as his counsel. It will be responsibility of the counsel for the accused, who was earlier appearing before this Court, to inform the accused about this order. Appellant will also be at liberty to forward a copy of this order to the accused as well as his counsel.